EcoReality land purchase trust
Plain English summary
If you're concerned that your hard-earned life savings would go away should the worst-case scenario happen and EcoReality "goes away" before the land can be paid off, you can put your money in a trust, and your money would be refunded if EcoReality goes belly-up, or your money gets converted to Class A EcoReality Investment Shares when the mortgage is paid off in full.
This trust (The Trust) is established for the sole purpose of collecting funds for the purchase of land for EcoReality Sustainable Land Use and Education Cooperative (EcoReality Co-op) in a manner that mitigates risk to the collective settlors/beneficiaries of the trust.
EcoReality Co-op has completed the purchase of 43 acres with structures on Salt Spring Island. The purchase agreement includes a $900,000 down payment, with $800,000 to be paid no later than 1 October 2010, subject to successful creation and delivery of title to the 43 acre parcel.
EcoReality Co-op is in the process of seeking member-investors who can help retire this debt and secure the land. However, with the significant risk of loss of funds due to possible default (should the entire $800,000 owing not be raised), it is difficult to get member-investors to commit funds to retiring this debt.
- "settlor" — one or more living persons who wish to eventually become member-investors of EcoReality Co-op.
- "beneficiary" — the settlors to The Trust are also the beneficiaries of The Trust, the living persons who will receive a benefit of the trust when conditions for release of funds is achieved, as described in Section 4.
- "trustee" — one or more living persons who manage the funds of The Trust.
3. Structure — Trustees
- Three trustees (Trustees) shall manage the trust funds.
- No trustee can be a settlor nor beneficiary to the trust.
- Two trustees must be current members in good standing of EcoReality Co-op.
- The third trustee must not be a current member of EcoReality Co-op.
- The responsibility of the Trustees is:
- To determine if conditions for release of trust funds have been met.
- To execute the release of trust funds and dissolution of The Trust.
- To manage the funds of The Trust in a low-risk manner, as to preserve its capital value.
- To account for the funds of The Trust, recording all contributions from settlors, income earned from investment of funds, and expenses of The Trust, using standard accounting practices.
- To allocate income from trust funds to the expenses of managing The Trust, as the Trustees deem necessary.
- JWS: the intention is that income from trust funds pay The Trusts's legal fees (which will have to be loaned to The Trust until there is income), and to go toward Trustee's time setting up and managing The Trust, plus any incidental expenses incurred.
- To periodically report to beneficiaries the financial condition of The Trust.
4. Conditions For Release Of Funds
The Trust will release its funds and discontinue operations upon any one of the following three conditions, as certified by the Trusees:
- Debt retirement: Should the assets of The Trust equal or exceed the amount needed to retire the debt of EcoReality Co-op, the assets of The Trust will be transferred to EcoReality Co-op for the sole purpose of retiring the debt of EcoReality Co-op.
- In such a case, beneficiaries will receive EcoReality Co-op Class A investment shares in an amount equal to their total contribution to The Trust.
- Should the assets of The Trust be less than the amount required in paragraph 4.1.1, distribution of Class A investment shares will be made to beneficiaries ratably.
- Should the assets of The Trust be greater than the amount required in paragraph 1a, the excess assets will be invested in EcoReality Co-op in the name of the Salt Spring Ecovillage Education and Development Society (SEEDS).
- Dissolution: Should EcoReality Co-op become insolvent or otherwise dissolve, the funds of The Trust will be returned to the settlors in the amount of their total contribution to The Trust.
- Should the assets of The Trust be less than the total contributions of the settlors, the assets will be distributed to the settlors ratably.
- Should the assets of the Trust be greater than the total contributions of the settlors, the excess funds will go to EcoReality Co-op, to be distributed according to EcoReality's rules of dissolution, or as determined by a court of competent jurisdiction.
- Other reasons: Should all three Trustees determine unanimously that a certain distribution of The Trust's assets be in the collective best interest of the beneficiaries, they may call a meeting of all beneficiaries for the sole purpose of seeking their unanimous consent to make such a distribution.
- Having been asked by the Trustees for their consent, should all beneficiaries agree unanimously with the Trustees' distribution plan, the assets of The Trust will be so distributed and The Trust dissolved.
- Should unanimous consent of the Trustees and all beneficiaries not be attained, no distribution of funds shall take place, except according to the conditions in paragraph 1 or 2, above.
- JWS: should we add a fourth condition that includes a deadline? Given that things should happen in the next year or so, I don't see why, especially with condition #3 as a "let's all agree to get out of this thing" clause. But perhaps there should be a "36 month maximum," as there is for EcoReality shares.
- JWS: we probably need bunch of legal "zipper" stuff here, such as governing law, dispute resolution, mediation & arbitration, etc. unless we can simply refer to governing law (The Trustee Act, et. al.). I recommend we through this all on Jim Pasuta's lap.
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